US court accepts Adanis’ plea to dismiss SEC fraud case

A US court has accepted a plea by billionaire Gautam Adani and nephew Sagar Adani to dismiss a securities fraud case filed by the US Securities and Exchange Commission(SEC). The order issued by Judge Nicholas G. Garaufis on April 7 allowed the request for a pre-motion conference. “The court GRANTS that request and DIRECTS the parties to confer and to contact the court's deputy to schedule the pre-motion conference,” the order said.
 
Adani’s petition to dismiss the case argued that it involved an impermissible extraterritorial application of US law and lacked personal jurisdiction over the defendants.

The SEC filed the lawsuit in November 2024 against Gautam and Sagar Adani, alleging they misled investors by not disclosing an alleged bribery scheme involving Indian state officials. The case is framed under US securities laws.

In response, the Adanis, through their lawyers, submitted a pre-motion letter ahead of a planned motion to dismiss scheduled for April 30 in the Eastern District Court of New York. They denied all allegations and challenged the legal basis of the SEC's claims related to a 2021 bond sale by Adani Green Energy Ltd (AGEL), the group's renewable energy arm.

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The defendants argued the court lacked personal jurisdiction, stating neither Gautam nor Sagar Adani had sufficient contacts with the US or direct involvement in the bond offering. The $750 million bond sale was conducted outside the United States under Rule 144A and Regulation S exemptions, with securities initially sold to non-US underwriters and only later partially resold to qualified institutional buyers.

The filing stated that Adani Green, not a US registrant, sold all notes from the offering outside the US via a subscription agreement to non-US underwriters, who subsequently resold the notes to qualified institutional buyers. The complaint did not allege Gautam Adani approved the issuance, attended key meetings, or directed activities involving US investors.

The Adanis also challenged the SEC's extraterritorial reach, noting the securities were not listed in the US, the issuer is Indian, and the alleged misconduct occurred entirely in India. They cited US Supreme Court precedent requiring a "domestic transaction" for US securities laws to apply, which the SEC has not plausibly alleged.

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The defendants disputed the bribery allegations, stating there is no credible evidence supporting the claims. They added that the bonds matured and were fully repaid with interest in 2024, with no investor losses alleged by the SEC.

The filing further argued that statements cited by the SEC regarding environmental, social and governance commitments and corporate reputation amounted to non-actionable "puffery". The defendants said the SEC failed to link them to specific misleading statements or demonstrate intent to defraud. They seek dismissal of the case in full and are prepared to appear for a pre-motion conference if required.